Indiana to repay county funds

Millions of local dollars were kept by state during period of deficit spending.

Millions of local dollars were kept by state during period of deficit spending.

May 17, 2008|NANCY J. SULOK Tribune Staff Writer

SOUTH BEND -- St. Joseph County will receive $8.6 million as its share of $212 million that the state owes to local governments, Gov. Mitch Daniels announced Friday. The money will arrive before the end of the month in the form of a property tax replacement credit, according to Jane Jankowski, a spokeswoman for the governor. The county auditors then will distribute it to local taxing units. Amounts to be received by other area counties are $1.6 million for Marshall County; $6.3 million for Elkhart County; $615,673 for Fulton County; $2.6 million for Kosciusko County; $4.2 million for LaPorte County; and $607,772 for Starke County. The governor's announcement of the distributions apparently caused some confusion around the state. St. Joseph County Auditor Peter Mullen said he received an e-mail Friday afternoon from the state auditor's office that said the state had received inquiries from county auditors and treasurers wondering what exactly the money represented. The e-mail said the money is connected to May and July 2008 property tax replacement credits and Homestead credits. The combined May and July amounts will be distributed in May, and there will not be a July distribution, the e-mail said. A press release from the governor's office said the money had been withheld from local taxing units in order to cover state obligations during a period of deficit spending starting in 2002. Some $761 million in payments were delayed to K-12 schools, higher education and local governments. In January 2006, the governor ordered repayments to begin. Since then, $518 million has been repaid, Daniels said. -$156 million owed to K-12 schools was repaid in January 2006 after the state's tax amnesty program. -$160 million, the remainder of the K-12 debt, was repaid in July 2006. -$131 million was paid to local government in May 2007. -$40 million was paid to higher education throughout fiscal year 2007, and $31 million this fiscal year. The remaining $31 million will be paid in the next fiscal year, which will begin July 1. This month's repayments are being made a year ahead of schedule, the governor's release said. All 92 counties will receive funds by the end of May. Mullen said he did not have details about how the money would be passed out. "It's money we had not counted on,'' Mullen said. It provides a little sigh of relief for local officials, he said, but it won't solve all of the county's financial problems stemming from House Enrolled Act 1001. HEA 1001 will place a cap on property taxes, greatly reducing the amount of revenue that local government units will receive beginning in 2009. Staff writer Nancy J. Sulok: nsulok@sbtinfo.com (574) 235-6234